3 Ways Financial Institutions Can Build a Culture of Data Analytics

"Today, if you are not a data-driven company you will not survive." - Peter Diamandis, author of BOLD

In an MX webinar last week, five industry-leading data analysts outlined how their teams use analytics. Zhongcai Zhang, Chief Analytics Officer at New York Community Bank, summarized the key lesson well when he said, “Ultimately, when we talk about data, we’re talking about culture. It’s a process to get there, but you’re not just aiming at an individual project. You’re building up a whole infrastructure that’s analytical enterprise wide.” In this post we look at three ways that banks and credit unions take that advice to heart and build a culture of data analytics.

1. Ask Absurd Questions

Data doesn’t have to be boring. Indeed, if your team falls asleep the moment the topic turns to data, you’re doing it wrong. “The fun way to do it is just to ask absurd questions,” said Paul Leavell, Senior Marketing Analyst at Charlotte Metro FCU. Leavell said that many of the connections he finds between transaction data and financial product usage surprise him. He’s looked at the difference between account holders who drive Mercedes and those who drive BMWs, as well as the difference between those who shop at Whole Foods and those who shop at Fresh Market. Sometimes the connections are useful, and sometimes they’re not. The main point is that he’s constantly looking for data that can give his institution the upper hand in providing account holders with more relevant offers.

Here’s how Leavell describes the process: “We have the ability to look at where people shop and then marry that data together with financial product usage. When we identify the relationship between those two events, we create targeted marketing opportunities. A real simple example is life-change behavior. So a first-time baby store purchase might be an indication of something happening in the house, and then boom, that sets off a marketing campaign.” Drawing those connections and inventing innovative marketing campaigns can be a lot of fun. Once your team catches this vision, even people who are not data experts can be part of the quest to ask absurd questions and invent fresh campaigns.

2. Have the Right People and Controls in Place

Without the right people and controls, there’s no chance that you’ll grow a culture of data. As John Dougherty, Director of Data Management, Orrstown Bank said, “It’s all about making sure you have the right personnel and the right leadership in place. They need to understand the risks around data and have right controls in place.” With the right people and controls, you’ll have a foundation to start spreading the word that data is a critical component of your bank or credit union's strategy.

In addition, with the right controls, employees will feel more secure that they won’t unintentionally be part of a data leak. Luckily, as Bob Gourley, Editor at CTOVision, pointed out, “there are repeatable design processes in existence right now that you can borrow for any solution. … For example, as you look to build your big data solution, look to see if others have architected all of that in way that encrypts all the data.” He added that “if you think through the kinds of things that have to be done, there’s no doubt that others have done those things before, so there’s lessons that you can borrow from.” In short, you can lean on the work on others to quickly put controls in place, and these controls can reassure your entire team that data isn't scary. This reassurance will empower your team to take part in conversations about analytics, which is how a culture of data begins to flourish.

3. Gather Data from Competitors

In the era of big data you can be sure that some of your biggest competitors are already gathering data on your institution. Whether it be through external account aggregation or a third-party database, it’s relatively inexpensive to access competitor data today. Parin Kothari, SVP-USA Digital Channels at TD Bank, said that TD Bank is already well versed on this front: “At TD, we are working with third parties to gather a lot of the market intelligence as to how the customer is spreading their assets across various financial institutions. We constantly track that. We are also starting to look at how prospects are bouncing between our website and other banks’ websites so we can figure out what customers are considering as our peer set.”

Can your financial institution do these same things? If not, you can quickly catch up by partnering with third party vendors, just like TD Bank does. When you’re able to effortlessly gather data from your competitors, you’ll be able to create campaigns that directly counter their offers. Say, for instance, that a segment of your account holders has auto loans with one of your competitors. You can use that information to create a special offer for that segment and undercut the competitor's rates. Soon enough, you’ll win over some of that business and your competitor will fall behind.

Conclusion

When you ask absurd questions, implement the right personnel and controls, and gather data from competitors, you’re well on your way to establishing a culture of data analytics. With that culture in place, you will have a competitive edge in the market and win wallet share. That's why establishing a culture of data is the best way for financial institutions to move forward in the digital age.